Pinnacle Grp., LLC v. Kelly, No. 1232, Sept. Term, 2016

• Court: Court of Special Appeals of Maryland
• Writing for the Court: Leahy, J.
• Citation: 235 Md.App. 436,178 A.3d 581
• Decision Date: 01 February 2018
• Docket Number: No. 1232, Sept. Term, 2016
• Parties: PINNACLE GROUP, LLC, et al. v. Victoria KELLY

235 Md.App. 436
178 A.3d 581

PINNACLE GROUP, LLC, et al.
v.
Victoria KELLY

No. 1232, Sept. Term, 2016

Court of Special Appeals of Maryland.

February 1, 2018

Argued by: Robin R. Cockey (Michael P. Sullivan, Cockey, Brennan & Maloney, PC, on the brief), Salisbury, MD, for Appellant.

Argued by: Anthony J. May (Public Justice Center, Baltimore, MD), on the brief, for Appellee.

Panel: Meredith, Leahy, James P. Salmon, Senior Judge, Specially Assigned, JJ.

Leahy, J.

235 Md.App. 445

The underlying attorneys' fees litigation springs from the lawsuit filed in June 2013 by Victoria Kelly ("Appellee" "Ms. Kelly"), a home-health employee, in the Circuit Court for Wicomico County against her employer, Pinnacle Group, LLC ("Pinnacle"), and its sole owner, Anthony D'Antonio (collectively, "Appellants"). Ms. Kelly sued to recover, inter alia , unpaid overtime wages, treble damages, and attorneys' fees under the Maryland Wage Payment & Collection Law, Md. Code (2008

178 A.3d 587

Repl. Vol., 2012 Supp.), Labor & Employment Article ("LE"), §§ 3–501 et seq. ("MWPCL") and the Maryland Wage & Hour Law, LE §§ 3–401 et seq. ("MWHL").¹ After a series of settlement negotiations, litigation in two state trial courts, and a decision from this Court applying a Court of Appeals' ruling on the scope of the MWPCL, the parties settled Ms. Kelly's claim for $15,500. She then petitioned the circuit court for $146,987.66 in attorneys' fees and $2,851.40 in costs. After the circuit court awarded $49,250.00 in fees against Appellants, they appealed to this Court. Ms. Kelly also filed a cross-appeal, contesting the court's reduction of her claimed attorneys' fees. We have rephrased and consolidated the ten issues presented by the parties into the following six:²

235 Md.App. 446

1. Did the Settlement Agreement preclude Ms. Kelly from seeking an award of attorneys' fees against Appellants?

178 A.3d 588

2. Did res judicata bar Ms. Kelly's petition for attorneys' fees and costs associated with her MWHL claim, given the dismissal of Ms. Kelly's suit on that claim in district court?

235 Md.App. 447

3. Did the circuit court err in awarding attorneys' fees associated with her MWHL claim without making the predicate finding that Appellants violated the MWPCL?

4. Did the circuit court err in finding there was no bona fide dispute in Appellants' failure to pay Ms. Kelly overtime wages?

5. Did Mr. D'Antonio qualify as Ms. Kelly's employer under the economic reality test so that he could be held jointly and severally liable for attorneys' fees?

6. Using the lodestar analysis, did the circuit court correctly determine that Ms. Kelly was entitled to attorneys' fees and adequately calculate the fee award?

On the first issue, we hold that the circuit court did not err in finding that the plain language of the parties' settlement agreement did not preclude Ms. Kelly from petitioning for attorneys' fees. Because the circuit court did not award any attorneys' fees for Ms. Kelly's MWHL claim or the district court action, we need not decide whether res judicata barred attorneys' fees for those claims. In regard to the third and fourth issues on appeal, the record reflects that the circuit court already made the predicate finding that there was no bona fide dispute when it granted partial summary judgment on July 24, 2015, and determined, properly, that Appellants withheld Ms. Kelly's earned wages without a good faith basis for doing so. We also conclude, in regard to the fifth issue raised, that the trial court applied the economic reality test properly in determining whether Mr. D'Antonio was Ms. Kelly's employer and in deciding that he is jointly and severally liable for any judgment against Appellants. Finally, while the circuit court did not abuse its discretion in deciding to award fees, we hold that the court erred in failing to satisfactorily articulate its reasoning for the amount awarded. Thus, we affirm all of the trial court's decisions that are properly before us on appeal, except that we remand for further proceedings on the amount of attorneys' fees awarded for the reasons explained below.

235 Md.App. 448

BACKGROUND

A. Ms. Kelly's Employment

Ms. Kelly worked as a companion care employee, a/k/a home healthcare worker, for LifeMatters, an entity providing care for senior citizens and the disabled on Maryland's Eastern Shore and in Sussex County, Delaware. LifeMatters is owned by Pinnacle Group, an umbrella company that has its principal place of business in Salisbury, Maryland. Mr. D'Antonio wholly owns Pinnacle Group.

For approximately eighteen months preceding Ms. Kelly's suit, her work schedule consistently pendulated between 97 hours of work one week and 88 hours the following week. For those weekly hours worked in excess of 40 hours during this period, Appellants did not pay Ms. Kelly an overtime rate of "time and a half" but instead paid only her standard hourly wage.

On at least two occasions, Ms. Kelly inquired about overtime pay and was informed that Pinnacle's policy was that it did not pay overtime. Mr. D'Antonio later claimed in his deposition that he believed Ms. Kelly was exempt from overtime regulations given the application of federal law

178 A.3d 589

exempting home companion workers,³ and he did not consider that Ms. Kelly may be entitled to overtime wages under Maryland law because of his belief that federal law superseded Maryland's law.

B. Ms. Kelly Sues to Recover Wages

After learning that she was, in fact, entitled to overtime wages under Maryland law, Ms. Kelly commenced the underlying suit in the Circuit Court for Wicomico County on June 10, 2013, claiming violations of the MWHL and the MWPCL

235 Md.App. 449

"stemming from [Appellants'] willful failure to pay her all earned wages, including overtime wages[.]"⁴ Ms. Kelly sought return of the wages and overtime owed, plus treble damages. She also asserted a claim of quantum meruit, seeking restitution or appropriate disgorgement of Pinnacle's profits. Finally, she requested an award of attorneys' fees and costs.

After receiving notice of Ms. Kelly's suit, Mr. D'Antonio contacted counsel who informed him that federal law did not preempt Ms. Kelly, and other companion care workers employed by his companies, from Maryland's overtime wage requirements. Nevertheless, Appellants filed their joint Answer on August 9, 2013, in which they asserted a general denial to all of Ms. Kelly's allegations along with the affirmative defenses of payment and statute of limitations.

Roughly six weeks later, on September 26, 2013, the parties met in Baltimore for a settlement conference. At the meeting, Appellants agreed to furnish certain documents, including Pinnacle's financial statements and tax returns. Ms. Kelly's counsel sent a letter to Appellants on October 9, informing them that Ms. Kelly had not yet received the documents (which were also responsive to Ms. Kelly's discovery requests) and informing Appellants that Ms. Kelly's counsel now represented Rhonda Russell, another LifeMatters employee who also did not receive overtime compensation.

On October 16, 2013, Appellants' counsel unilaterally tendered two checks, enclosed in a letter to counsel for Ms. Kelly and Ms. Russell. The letter stated, "I also enclose a check from Mr. D'Antonio to Ms. Kelly, in the amount of $15,067.21, which is the amount of overtime Mr. D'Antonio has determined to have been uncompensated." The letter also contained

235 Md.App. 450

the explanation that "[t]he gross amount of overtime compensation due ... would be ... $21,413.25 in the case of Ms. Kelly. I have enclosed a statement detailing the withholdings taken from both checks." Included along with the checks was a draft stipulation to dismiss the claims with prejudice. Ms. Russell accepted the check, but counsel returned Ms. Kelly's check, asserting that payment did not make her whole and that damages and attorneys' fees remained viable claims. On

178 A.3d 590

November 7, 2013, after receiving verification from Appellants' counsel that accepting the check would not release her claims, Ms. Kelly accepted her check. Appellants then filed an Amended Answer on the same day, in which they added the affirmative defense of accord and satisfaction.

C. Attorneys' Fees

Still not in receipt of the requested financial documents, on November 8, Ms. Kelly's counsel sent another letter, stating that "[i]t is necessary to know the health and profitability of our clients' employers, in order to assure that damages are awarded in [sic] amount that actually would have some deterrent effect." On the same day, Appellants filed discovery...